Why do a SWOT analysis on retail technology? The intention was to consider the full constellation of technology strengths, weaknesses, opportunities, and threats, as well as "tech effects"--those intended and surprise consequences of IT.

From that we distilled the points that seemed, to knowledgeable observers, to be the most salient. All of this has relevance for creating effective customer sales and service process. The connections you'll see here might seem tangential, but to many of our sources they are quite real. In a distributed computer environment, "the hip bone's connected to the ear lobe."

That is, IP networks, open source platforms, high-capacity or clustered servers, easier-to-scale and manage databases, and other back-office systems, tools, and techniques are increasingly relevant to what the employee touches and what the customer sees within an application.

Said differently, if the back-office can be optimized via simplified code writing and deployment, and the business objectives easily weaved into operations (in the form of rules and other consistent workflows), then the bank can run better. Requirements such as customer onboarding, issuing retention tactics, messaging, or cross-selling can be standardized by a process and IT design that evokes semi-automated tasks as repeatable, perfectible, and consistent.

Take "on-boarding," biz speak for the process of introducing a new customer to your bank, including application processing and initial

sales outreach. Wouldn't it be terrific if all business units conducted sales and compliance functions with a uniformity, whenever possible, allowing for the appropriate custom workflows?

This simple but profound concept of better front-to-back or straight-through-processing linkages and uniformity (which should touch every channel, each line of business) has big-picture operations implications. Among them: the need for data quality; the need for channel integration, and the opportunity for better coordination among departments as they hand off work or, say, fine tune product features such as pricing and distribution.

And so, we gave free reign to the opinions of CIOs and those with similar responsibilities in their identification of the issues. Also on the hook were analysts, consultants, and professional thinkers.

Sure, the thought of yet another reengineering project might be painful. Yet this new wave of IT--including service oriented architecture (SOA)--will make your institution more agile and responsive, experts say.

So forget about yesterday's news citing problematic channel-specific or enterprise customer relationship management projects. Set aside, too, sweeping claims of customer-facing applications that don't quite capitalize on the relationship.

It's not that these issues have magically dried up as much as become yesterday's lessons at many banks, spurring new experiments in workflow and related technologies.

Strengths

What IT strengths can be attributed to retail banking sector? Today, most business bank executives function with interdisciplinary aims and with multiple departments in mind as they plan IT projects.

No single bank has this down to a perfect science. Yet deliberate progress is being made, as evidenced by new "org" charts, and enterprise managers, which have the job to "by God get things done," as Seinfeld's Kramer was once told by the Post Master General.

Whether the czar in question is there to address payments, customer service, or risk management, key objectives on his or her project list relate directly to giving customers meaningful value, efficiency, and safety. This is more than a theoretical connection, experts say. Business process can be better thought out when you keep customer-facing objectives in mind as you design all systems.

If done correctly, this awareness filters down to the most routine capabilities. Need a customer question answered? The branch employee should have the same policy information that is presented on the website. A transaction started by the customer on the internet should be traceable in another channel, like the call center or even the branch. It's been talked about for years, but increasingly, it's getting accomplished.

No bank IT discussion can begin without reference to delivering services and products to the customer, says Bill Wray, CIO, Citizens Financial Group, Providence, R.I. "For us, all development starts and ends with the customer. We need applications and processes to be easy-to-use and have high utility for our personnel too," he says.

Citizens, which considers itself an adopter of packages with minimal customization required, is in the midst of two-year-old branch refresh.

"We want our tellers to have systems that organize that customer experience. We want to be able to support rapid inquiries and fast resolution of conflict."

Wray speaks at length about customer accountability, proving himself the antithesis of the "IT for IT's sake" type of technologist.

Elsewhere, other banks are adopting a customer focus to set direction for IT deployment. This is yielding more useful applications that let retail bankers see customer details and value, notes Ashwin Goyle, vice-president, product manager financial services, Oracle, Redwood Shores, Calif.

Consultants may push you to do more, shareholders may push you to do more with less, but, essentially, line-of-business executives are long used to crafting safe procedures that are on target, on time for regulators, and effective in terms of requirements, agrees Alenka Grealish, manager of the banking group, Celent, Boston.

Systems could always be less manual, "klugy" (Geek speak for "haywire"), or more elegant, but in fact they do turn transactions.

"It's interesting because the core systems are about 40 years old," Grealish says. "Yet the IT staffs have, admirably, kept things together with redesigning the middle tier," she admits.

What's any of this got to do with what faces the customer in the branch, at the ATM, or on the telephone?

"Everything," says John Weisel, partner, financial services practice, Accenture. The firm's Strategic Information Technology Effectiveness Consulting Division helps clients "line up and link" IT initiatives with business requirements and typically tries to get clients thinking about orchestrating front- and back-office processes.

"There is finally the realization that strategic IT management is the single biggest 'lever' that can both drive cost out of the system and improve customer experience," Weisel says. The idea--a perennial concept with some renewed interest--is to lower the basic maintenance costs by reconfiguring the back office, leaving room in the budget for innovation. An example of this is use of web-based ATM technology that is centrally controlled for simpler system upgrades.

Retail banking also benefits from a long tradition of building a culture of compliance and working fairly consistently within that framework.

Yes, the processes can be redundant or too manual for those with a perfectionist's eye. But, most often, bank processes keep customer data protected, suspicious activity reports (SARs) filed, loan business generated, and deposits flowing without lapse.

"This careful attention to detail helps bank staffs as they take on the task of automating process or working to enhance a channel like the internet," says Mary Pilecki, senior analyst, human centric financial services channels, Forrester Research, Cambridge, Mass. As electronic bill payment finally becomes established, banks that have tinkered with the customer service aspects of the channel will be rewarded, she says, with more rapid acceptance and a lowering of payments processing costs.

Basic safety and soundness genuinely counts in banking and it's a given that shouldn't be taken for granted by bank executives as they communicate with customers. This is evident foremost in enhancements made with disaster recovery and continuity in the five years since terrorist attacks on our financial and governmental hubs.

While on the surface, these disciplines are "merely" about security, they obviously dramatically impact the public's perception of a bank's competence and caring and should be a part of the marketing effort, says Susan Landry vice-president, research director of Gartner, Stamford, Conn. Landry made the remark during a presentation on creating a roadmap to 2012, at a recent Gartner conference.

When it comes to how banks will organize themselves to deliver on perceived customer expectations, "many critical uncertainties frame the scenario," said Landry.

"The potential is there for the industry to move into a greater state of electronic collaboration--in the form of e-commerce and information sharing--among discrete banks and with their partners and customers. In this model, information is fluid and critical," she explains. "Free trade is the norm and global brands, and partnerships to bundle services, are dominant."

But Landry isn't certain that such a version of the future will come to pass. "With the regulatory load and the fight for customers and employees all as forces with backlash potential, the industry could slip back into the secrecy and defensiveness that characterized its workings before the boom of interstate banking."

Yet, if gradual, decade-long cultivation of customer-centric attitudes are any precedent, banks will find ways to work together (and work within their environments) to create high-value service for customers, said Landry. This might mean payments are delivered over a cell phone or BlackBerry, or it might take the form of bank and accounting office offering budgeting and tax services, or the delivery of a similar blended service package that leverages bank value in new ways.

Yet another industry strength, says Accenture's Weisel, is increased use of tools that let banks think and act like retailers in their branch. Video and digital signs are two examples. Knowledge management kiosks that give tellers and branch personnel the answers at their fingertips are another.

In terms of marketing activities, a more sophisticated understanding of branding and messaging is beginning to be enhanced by technologies that help to keep content on point and directed to the right set of eyes and hands, says Landry. "Trigger messages that put valuable information in front of the customer or bank staff can make a big difference in operational flow and revenue."

One surprise talking point came from Citizen's Wray, who pointed out that the oft-maligned mainframe is "one of the fastest servers around," and not nearly as finicky and problematic as it once was.

Among the top 25 banks that serve consumers, nearly all are also benefiting from improved channel integration, even if done piecemeal, in the tradition of "painting a bridge."

Weaknesses

No discussion of retail banking IT weaknesses would be complete without a reference to legacy. Ditto on silos.

Despite his earlier comment about mainframes, Bill Wray still believes that "it's easier to be a new bank than a bank with history. This has long been the case but it's never more true than today." Legacy and silo systems have to be addressed in any scheme pertaining to IT delivery, whether the "touch-point" is the internet, telephone, or CRM system, or ATM device. Nobody needs to tell the astute reader this truism.

Yet, in the mad daily rush to get projects done, nuances surrounding how a given legacy environment operates, for instance, hard and soft dollar maintenance costs, or design limitations, can be forgotten until a given project hits critical mass, said Garmer's Susan Landry. Then it can be too late to do anything interesting or transformative.

Yet beyond the batch-oriented and brittle scope of the actual technology as it muscles day in, day out, there's the "tech effect" of how limited legacy begins to limit the thinking of personnel.

"There's this mentality that starts to develop in an organization that hasn't figured out how to work around its legacy," says Leonor Ciarlone, senior analyst with the Gilbane Group, based in Cambridge, Mass. "It's partially, 'we've always done it this way' thinking, and partially, 'if we can't take direct costs out of the system during each project phase then we won't touch this aspect of innovation'."

Fiefdoms, political turf wars, and perennial communication problems between different bank units isn't breaking news, but in 2006, it's still a factor, and it can be a significant weakness at many institutions.

"If budgets are too fixed to a line of business, you'll have this unwillingness to look at the enterprise and what's good for the entire bank, and by extension, what's good for the customer," says Celent's Alenka Grealish.

Opportunities

One big idea in retail delivery's near future comes in the technical form of the service. "Service," here, deriving from the emerging component approach to delivering applications known as service oriented architecture, or SOA. These "mini programs," or components, can be combined with others to create composite applications that can, for instance, blend customer service aspects with an existing sales process.

With SOA, new business logic becomes available to workers, or it could be delivered directly to a customer via the web. Add to that workflow and business process management tools that can help automate business processes by linking what department A does to what department B does and so on.

What you get are applications that work among departments: with all aspects of the workload accounted for and all workers accountable. A dense, hard-to-trace process becomes, in the lingo, "visible." These subjects have been covered in our Tech Topics department, yet SOA appears here, too, because of its potential for creating lean and flexible operations.

Chip Greenlee, the director of marketing solutions for financial services industries, Hewlett-Packard, San Jose, Calif., says banks are using SOA to figure out how to transcend the limitations of legacy systems. SOA can help with integration, among other types of operational functions.

The system design, platform choice, and application feature menu should follow a careful consideration of customer needs coupled with business needs tempered by a review of security requirements.

In this version of system deployment, workflow technologies and better process design are key ingredients, offering the potential to take advantage of the fragile-but-emerging culture of cooperation alluded to in strengths.

"A corporate focus and intelligent workflow deployment can improve how the lines of business operate," says H-P's Greenlee. "Something as complex as absorbing a merger or something as seemingly simple as customer on-boarding can all be helped by a services approach to infrastructure."

The procurement area of National City Bank, Cleveland, provides an example, using a new system that has become the Salesforce.com for supply chain management.

In an interview, banker Jean-Jacques Beaussart discusses how procurement has been improved, and also the bank's culture of end-to-end process improvement, its use of Six Sigma, and the need to ultimately render each process as visible, and fiscally sound. In other words, his philosophy ties directly to the vision of efficiency espoused by SOA acolytes.

"I approach all projects with a rigor that lets my team gain efficiencies and the ability to shave real dollars out of a process such as procurement management," says the regional bank's senior vice-president and chief procurement officer. "There is a similar culture of discipline used in developing the user-experience aspects of internal projects as well as in customer-facing projects like CRM."

Basically, says Beaussart, who keeps his thoughts sound-bite-oriented, "we want a rules-based policy to become 'operationalized' so that we know what our travelers are spending and why, or what a key supplier is charging us and why. On top of that, we want to deliver applications rapidly," the bank executive says; "ideally, in three months or less. You don't want people to lose sight of what they wanted. With longer IT project timelines, it becomes harder to get everyone to make full use of the new technology."

SOA also has implications for the bank's procurement pricing model by making the latter subscription-based, says Tim Minahan, senior vice-president of marketing with Procuri, the maker of the procurement system that National City adopted.

Say, as a CEO, you need your institution to offer a new loan product to keep pace with the competition. Or, your business/tech challenge is phone-based authentication that needs to be refined or given teeth. Or, DDA functionality needs to be upgraded. Streamlining delivery of code can help with any of these customer-facing efforts.

"Whether the immediate, practical drivers are compliance, customer service, or something technical like Six Sigma, the underlying psychology is sharing information to better expedite work," says Gilbane Group's Ciarlone.

There are several buckets of issues that SOA and related technologies can help banks deal with, says Oracle's Goyle. The first is to become customer-centric in more meaningful ways, finally moving beyond the static customer information file.

The next revolves around coping more efficiently with the risk management and regulatory burden, (and again, part of this filters down to the customer experience, particularly finding that balancing point between being efficient and friendly to the customer while also fulfilling requirements such as Know Your Customer).

Yet another has to do with how a given bank improves its asset mix, especially IT assets and personnel, essentially driving out unnecessary process duplication and cost and driving up productivity.

Threats

To be sure, bankers in many corners of the industry are beginning to take on issues such as man-in-the-middle attacks and identity theft, but they have much more investing to do and far to go, according to many experts.

The hurlyburly surrounding the latest FFIEC requirements over two-factor authentication illustrates this perfectly, notes Andrea Klein, chief marketing officer for Identrust, San Francisco. Even in a market littered with solutions, confusion is the norm. Identrust recently issued a white paper on reputational risk that neatly summarized how tech and process-related disasters can damage companies--sometimes permanently.

"The state of confusion surrounding this single facet of bank operations security points out, yet again, that operational risk and associated reputational risk--a kind of Gordian Knot--will keep IT and business staffs stepping for quite some time," notes Klein. Indeed, anti-money laundering programs, KYC, and related requirements all reflect critical tech implications, she adds. Efficient banks will find ways to automate accordingly.

Another threat, or at least a potential Achilles heel for retail operations, is the industry's fondness for growth by acquisition. While many banks are old hands at conversions, they don't necessarily manage the customer-facing transitions with the same virtuosity. "Customers need to feel as if they are a primary consideration in the delivery of services under a new banner," says Accenture's Weisel. "This requires communication."

And then, there's the strength that can become the weakness if the reliance on it is steel-grip tight: that would be the bank's "culture of careful." Basically, says Forrester's Pilecki, opening up more customer service processes and other behind-the-firewall capabilities will require banks to make adjustments to accommodate new distributed risks.

Strengths

* Better interdisciplinary delivery

* Czars of operations such as risk, payments, and data management

* A middle tier of IT that compensates for some of core's weaknesses.

* Newfound marketing prowess and better ability to focus on the customer

Weaknesses

* Dependence on legacy core systems

* Silo orientation, too bound to traditional methods of IT management and project delivery

* Fiefdoms, turf wars that spoil cooperation and collaboration

* Failure to think with corporate or enterprise perspective when planning IT projects

Opportunities

* Service oriented architecture (SOA), which can create composite applications and better process design

* Change management leads to meeting key project objectives

* The ability to improve process easily

Threats

* Security issues challenge key customer touchpoints

* Reputational risks: just one data spill or negative news story can cause real dollar loss

* M&A meltdown. Too many acquisition-related conversion projects can sink the most determined ship

* Culture of careful: too much risk avoidance

By Lauren Bielski, senior editor